What if Donors Could Give More Now and Pay Later?

July 13, 2022      Roger Craver

A huge bonus springing from the BBB’s Wise Giving Alliance’s Heart of Giving Podcast are the windows host Art Taylor opens onto the personalities and motivation of folks who do the work, provide the charitable services, and come up with innovations worth exploring in our sector.

Such was last week’s podcast featuring Dominic Kalms, the CEO and Co-Founder of a fascinating new company– B Generous –,  with the mission of  increasing both the volume and amounts of money donated to charity by lending money who already want to give and, hopefully, motivating them to give more than usual.PB Generous, which claims to be “the first-ever philanthropic credit product for consumers’, is modeled after the “Buy Now Pay Later” approaches that have grown rapidly around consumer purchases on credit. Think Affirm, Klarna, AfterPay for nonprofits—but without interest charged to the donor.

 

Here’s a summary of how B Generous works:

  • Donors finance their contribution. Hopefully, the ability to finance will inspire a larger-than-normal size gift. (B Generous has   research showing 70% of donors wish they could give more and 83% of donors who saw the video below said they’d double the size of their gift if paid over time.)
  • The financing is interest and fee free to the donor over a period of time. The donor doesn’t have to pay anything at the time of donation and can choose to pay over a period of 3, 6, or 9 months.)
  • Donors to charitable organizations get a full tax deduction right away.
  • The charity receives the donation immediately, less the B Generous fee that ranges from 8%-16% of the donation amount.
  • The nonprofit gets all donor and transaction data. The fee charged to the nonprofit covers the cost of the tech platform and any associated costs.

Here’s a brief company video with a top line description of B Generous from the donor’s perspective:

 

[Editor’s Note:  According to BGenerous, 83% of the 1000 donors who watched that video said they would double the size of their gift if they could pay it over time.]

And this top line view from the nonprofit’s perspective:

 

Questions, Thoughts, Opportunities

Intrigued, I followed up with Dominic Kalms, the Co-Founder, for more details.

Agitator:  How does B Generous make money?

B Generous:  “It was important to us from the start that the product be completely free for donors. This means no fees, transaction costs, and no interest…ever.

“However, we are a business, and we need to pay our employees a fair wage and keep the lights on. The way we make money is simple: when a nonprofit signs up on B Generous they elect to cover the program fees associated with using Donate Now, Pay Later™. This means there are no subscription fees, SaaS fees, fixed or hidden costs for the nonprofit, and the nonprofit only pays a small “success fee” on each completed Donate Now, Pay Later™ transaction.

 “But we were still not satisfied, so we added another feature to our product which allows donors to cover a portion of these fees on behalf of the nonprofit. As donors go through the Donate Now, Pay Later™ flow they will be asked if they’d like cover a portion of the program fees, the good news is, we’ve observed rather high opt in rates for that.”

Agitator:  Where does B Generous get the funds for financing donations?

B Generous:  We have just raised a $10M venture capital round from some of the top VCs in Silicon Valley and New York, and we have signed two Lending Agreements with two Banks for a total of $120M in gross loan volume to power the Donate Now, Pay Later product. “

 

AgitatorHow many nonprofits are currently using B Generous ?

B Generous: “We have 150 nonprofits testing it now in a closed environment. Some of the largest nonprofits in the world are testing it right now actually. We’ll have some results and findings to announce in a couple of weeks.”  [ Agitator note: We’ll follow up and report what the tests reveal.]

 

Agitator: Because B Generous is offering the donor credit, and that credit must be approved, any delay in the approval process might cut down on impulse or motivation.  Is there a delay in checking creditworthiness and is this a potential problem?

B Generous:  “No.  It takes about 3 seconds to come back to the donor with a decision. The donor puts in the amount that they want to donate. At that time, they are offered opportunities to split the donation up over a certain number of payments.

The system than runs a soft credit check that, as I said, takes about three seconds to come back with a decision. At that point, the money is sent from B Generous to the nonprofit, the donor gets the full tax deduction, and the donor doesn’t pay any money out of their pocket at that moment. Instead,  that they get to pay over the time period  they select completely for free. So, if they’ve chosen to pay over three, six or nine months, they can execute their choice completely free.”

 

Agitator:  I’m sure our readers will have lots of questions and want to know some technical ins and outs, so how do we learn more?

B Generous:  I suggest they contact Dave Marcacci ( dave@bgenerous.com) who will not only answer questions but help organizations how they might put this innovation to work. Or, you can go to BGenerous.com and put your information on their contact form and they’ll be in touch.

Some Agitator Thoughts

Here at Agitator Global HQ, we’re always thrilled to explore and test promising new approaches.  As we kicked some ideas around here are a couple of approaches we’ll test with B Generous.

  • Bigger Gift for Greater and Timely Need. Seems the idea of giving MORE NOW may be a good one.  In great emergencies (Ukraine, hurricanes, legal defense, abortion bans) when funds are most urgently needed, many folks would like to give more but fear that would strain this month’s budget.  Explaining how they could meet their needs to help in a bigger way immediately may do the trick.
  • Upgrading to Mid-Level,  Named Funds or Special Occasion Funds.   On occasion some folks would love to give more to do their part in launching or  to meet the goal of a particular fund or gift club.   B Generous allows them to do that immediately (and pay the commitments off over 9 months).  AND—most importantly—the organization gets the full amount of my donation right away (minus whatever success fee the nonprofit pays)
  • Matching Gift Challenges. Assuming you’re interested in helping with a legitimate matching gift challenge (I’m not talking about “your-donation-matched -17-by- midnight” scam) here’s a good way to do it.  You help the organization meet the challenge match and the organization meets the donor’s challenge.  Win. Win.
  • Same considerations with Sustainer and F2F. Is B Generous of use – both for cash flow and bottom-line effect—in installment giving where the upfront costs of acquisition are high, and the nonprofit must wait 12 or more months to recoup the investment? Plus, no risk of pledge defaults and delinquencies.  It should be tried.

 

ALL OF THIS EXPLORATION IS WORTH THE EFFORT AND THEN SOME IF THE EARLY RESEARCH BY B GENEROUS PROVES TO SIGNIFICANTLY INCREASE AVERAGE GIFTS, ELIMINATES PLEDGE DEFAULTS, AND DEPOSITS THE MONEY IN THE NONPROFIT IMMEDIATELY.

NOW FOR THE BEAN COUNTERS….

No doubt with those who read that B Generous charges a success fee of between 8% and 16% are saying, “That’s crazy.  I only pay 3% or 2% or 6% to my CRM and payment processor.”

Get out the back of the envelope, ask and answer some basic questions.  Assuming my organization pays an 8% fee ($9.60)  for a $120 Sustainer.  I’d get $110.40 immediately. There’d be no risk of delinquency or default and no cost to my organization.  I’d get all the donor data.  In short, do the math and then decide if you should explore.

Seems to me that as our sector struggles with various issues ranging from the involvement of younger donors, to holding on to and upgrading donors in an uncertain economic climate that it’s time we all be generous with our time and grain and do some out-of-the-box thinking.

As you think about this, please share your thoughts, questions, concerns, and ideas of how you’d apply Be Generous.

Roger

P.S.  Again, our thanks to Art Taylor and the Heart of Giving Podcast.  You can subscribe free of charge on your favorite platform and urge your friends, colleagues, and board members to do the same.On Apple .On Spotify. On Google. OnYoutube

10 responses to “What if Donors Could Give More Now and Pay Later?”

  1. Dan Kirsch says:

    FYI there’s another new company in Boston called Givzey doing the same thing. It was founded by a former fundraiser at Babson College whose first fundraising tech company, Gravyty,was recently acquired by Graduway.

    • Roger Craver says:

      Dan,

      Thanks for this. We’ll certainly check out Gively.

    • Dorothee S says:

      Wow, B Generous looks amazing! Love that you can have 9 months or more for your donors to pay back. We faced a huge problem with recurring gifts and pledges not coming to fruition…led to major cashflow issues and a lot of operational time spent tracking things down…so great that someone else wants to take on that burden! And like many other NPOs, we faced issues getting one-time donors to increase their donations for a subsequent ask or getting new next-gen donors to convert…if B Generous can do what Dom says here, we’re in!

  2. Sam Lin says:

    Dan Kirsch…Givzey isn’t actually live yet from what I know and they are not able to actually process loans now from what I understand either since I have tried several times to contact them and have never received a response from them. Also I have seen the B Generous product and they do not do the same thing, B Generous lets you finance over 3,6, or 9 months, Givezey does not allow for that. They are not really offering the same service. Just wanted to make sure we are putting out correct information since this is a small community.

  3. John Clossman says:

    This is correct, I had the same experience, was not able to get a response from Givzey when I reached out, not sure if they are real or actually operating but either way, this sounds like a very cool service, I am going to check out B Generous now. Thanks for the article.

  4. Nick Stinson says:

    I’m not fooled by the “no interest” marketing baloney. This is real, actual debt.

    Non-profits with a mission to fight poverty or end homelessness can now be funded by consumer debt. Great…

    Neoliberalism at its most craven.

    • Jacinda S. says:

      Sorry, you are not correct. Interest free is very different than charging high interest rates like what Affirm, Klarna, AfterPay do. Those guys charge consumers unknowingly high interest rates and get kids stuck in these debt spirals, that is totally different than offering someone an interest-free loan like B Generous does. You may not like it but don’t conflate the two. One is absolutely better than the other, no question. Not to mention if you are going to use the credit markets, may as well use them to help and do some good in the world, not buy another TV that you don’t need. B Generous’ product sounds very cool, I am going to check it out for my nonprofit for sure. I love the innovation, very smart and I do think my donors would use it to increase donations.

      • Kevin Schulman says:

        I would echo Jacinda’s take on this, this is legitimately interest free to the donor and there are a variety of scenarios where it is a better financial deal for the donor by spreading out payments at no cost to them. Here is a for instance,

        1) Donor A is going to give two donations during course of year of $50 each. This option would allow this person to give $100 now and pay it out in 6 or 9 installments. The net present value of those future dollars is less than $100. Only a tad less of course but less. And with inflation increasing it is maybe a tad x 2. This scenario is probably a “loss” scenario for the charity since they only get $90 (I’m assuming a 10% charge paid by charity). The charity does get all $90 now instead of spread out over 2 payments but that cash flow win probably doesn’t offset the $10 loss.

        2) Donor A in the metaverse was also planning to give two donations during the year, $50 each. But, in this metaverse this Donor A decided to give $120 instead. This person still gets to spend a tad less than $120 with net present value of spreading out payments. The charity gets $108 all upfront.

        The only issue, which perhaps Nick Stinson is suggesting, is if the $120 is out of reach for Donor A and beyond their means. We humans are (irrationally) more optimistic about our future self and our future financial situation than our present self so I suppose this is possible, the ‘stretch’ gift that makes someone shell out more than their discretionary spend would/should allow. But, that’s awfully paternalistic to blanketly assume folks can’t make that judgement themselves. It also ignores that much of giving is highly elastic and conditional not on means but on context and what I was asked to give, etc. Point being, there is often a range of giving that is north of whatever amount I did give ($50, $500, $5000) that makes zero difference to personal, financial situation or means.

        For this to make sense for the charity that north range merely needs to be a $1 more than the charge to the charity. I do have questions about conversion rate and could imagine that conversion goes down if this option seems confusing or complex. Call it the unintended consequence. I think behavioral science (our expertise) would have a lot of ideas on how to message on this on the donate form to avoid that fate

        • Nick Stinson says:

          I think my comment about the “no interest” marketing baloney was read too literally. The baloney part wasn’t about the “no interest” claim (although I’m dubious – see below), but about the idea that this causes no harm to donors.

          Kevin, yes! I’m suggesting this will be used by people to make gifts beyond their means. 100%! Our lizard brains don’t consider this real money… and certainly not OUR money. So why not up the ante at checkout? And sure, why not, I’ll cover the fees for the organization… after all, “I’m not paying now anyway”. (And since the fee structure is designed to cover what interest would have covered… I’m paying interest. Ahem.)

          9 months rolls around and the donor doesn’t pay (let’s imagine they had a $750 emergency car repair they couldn’t cover). What happens next? The company forgives the debt and all is well? I don’t think so. Does it hurt the donor’s credit? Does the debt get sold for pennies on the dollar to a collections agency and now collectors are calling to harass donors and demand payment on behalf of the local anti-poverty organization?? What a richly rewarding donor experience that is!

  5. Nikita says:

    Nick, good questions. I actually asked B Generous about this because I am going to use them for my nonprofit. Basically yes the company does forgive the debt, there will not be harassing phone calls form debt collectors and the lenders discharge the debt if the donors don’t pay. That’s not to say they encourage that behavior of course, but if a donor runs into an issue on payment they actually get put into a hardship program which is another benefit and B Generous works with the donors to figure out a solution that is convenient for them and they do not charge late fees or anything punitive like that. That’s what they told me and it sounded like a good solution to me and for my donors. I was impressed with their level of thoughtfulness on this actually.